Treasury imposes new sanctions on Russia over Ukraine

Jul. 16, 2014 - 07:15PM
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Recruits of the Ukrainian volunteer battalion of Azov take the oath July 16 in downtown Kiev. The U.S. Treasury Department imposed new sanctions against Russia on July 16. (Sergei Supinsky / Getty Images)

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The U.S. Treasury Department imposed new sanctions against Russia on Wednesday. Treasury officials said the sanctions in the financial services, energy and arms sectors were imposed because Russian leaders have not done enough to de-escalate tensions with Ukraine.

A senior Obama administration official said Wednesday that Russian separatists carried out more than 100 violations of the June 20 ceasefire called for by newly elected Ukrainian President Petro Poroshenko. The ceasefire lasted 10 days before separatists repeatedly breached it with conflicts in the eastern part of the country.

Russian forces moved more heavy weapons into Ukraine and the Ukrainians lost three border posts to separatists during that time. Ukrainians have since resumed efforts to secure the country, with liberation movements in Sloviansk, and are now in the process of restoring public services, the U.S. official said.

But the official, who spoke on the condition of anonymity, said Russian aggression has continued in Ukraine.

“You will have seen on social media over the last week, convoys of Russian tanks, armored personnel carriers, infantry combat vehicles, rocket launchers, self-propelled mortars flowing into Ukraine,” the official said.

Pro-Russian separatists shot down a Ukranian transport plane on July 14 and on the next day, separatists commandeered several bridges into Donetsk and continued attacks on border checkpoints.

The new sanctions were imposed to reassure the Ukrainians that the U.S. does not condone this response, the official said.

Most notably, Gazprombank OAO and VEB, under parent company Gazprom, have come under new sanctions prohibiting business transactions between the U.S. and Russia.

But Gazprom and its CEO, Alexey Miller, have not been targeted and senior administrations officials would not comment on why they have been spared.

“The steps we have taken today to restrict access to the U.S. capital markets for these major banks and two major energy firms [OAO Novatek and Rosneft] is what we are doing today,” said a senior administration official. “We have the capacity in our sanctions programs to expand the scope of the prohibitions and the list of the entities affected if the situation warrants.”

The sanctions also extend to eight Russian state-owned defense technology firms, a shipping facility in the Crimean Peninsula, and actions against four Russian government officials and members operating without authorization from Ukraine’s government.

“Market analysts are already forecasting significant continued outflows of foreign and domestic capital from Russia, and further weakening of growth of prospects for this year,” the official said.

The International Monetary Fund and World Bank estimate a capital flight from Russia to be between $100 billion and $130 billion, the official said.